Oil set for biggest weekly gain in 2017 as Opec eyes extension

LONDON: Oil headed for its biggest weekly increase this year amid speculation Opec will extend its deal to curb output and ease a global glut.

Futures are up 4.7 per cent in New York this week, climbing back above $50 (Dh183.6) a barrel after Kuwait Oil Minister Issam Almarzooq reiterated support for prolonging a six-month deal to trim supply past June. Still, prices are down 6.5 per cent this quarter, their biggest three-month loss since late 2015, as US crude stockpiles continue to pile up.

The latest comments from Kuwait’s oil minister are bolstering confidence in OPEC’s commitment to drain swollen stockpiles ahead of the group’s next formal ministerial meeting on May 25 in Vienna. Five producers from the Organisation of Petroleum Exporting Countries joined with non-member Oman on Sunday to voice support for an extension. Optimism over the cuts had wavered recently amid a surge in US supply, with the nation boosting crude output last week to the highest in more than a year.

“Opec is fully aware that running down the crude overhang will take more than six months, so a rollover of the deal is still the most likely outcome,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. “Overall balances are heading in the right direction, but only crude stock draws will help prices break out of the current rangebound trading.”

West Texas Intermediate for May delivery was at $50.18 a barrel on the New York Mercantile Exchange, down 17 cents, at 12.52pm in London. Total volume traded was in line with the 100-day average. The contract gained 84 cents to $50.35 on Thursday, closing above $50 for the first time since March 8. Prices are down 7.1 per cent this month, the biggest slide since July.

Cut extension

Brent for May settlement, which expires Friday, slipped 38 cents to $52.58 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $2.43 to WTI. The more-active June contract fell 17 cents to $52.96.

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Kuwait and fellow Opec members Iraq, Venezuela, Angola and Algeria backed an extension of the agreement to cut output while meeting in Kuwait City over the weekend to discuss compliance with the pledged reductions. The supply curbs are gradually restoring the market to balance, the group’s Secretary-General Mohammad Barkindo said in a statement this week.